So let me get this straight before I get too worked up: Apple has been banning apps that were originally written in Flash, but ported over to iPhone/iPad? Or is the 'unported' Flash that they are banning?

The former is the only type of thing they can ban. If Flash is 'unported' it is just.... well, Flash and isn't supported by the iPhone anyways.

To answer your question: Yes, Apple is banning apps that were originally written in flash but ported to something that can be used in an iPhone/iPad/iPod.